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Nov. 18, 2013, 10 a.m.
Business Models

How taking cues from Business Insider is making a popular Kenyan website profitable

Ghafla won’t win any journalism awards any time soon, but it’s evidence that some of the revenue models pioneered by a few American outlets are finding uptake elsewhere.

Kenya is attracting a good deal of attention from the Internet-inclined these days. It has seen a new wave of impact investors, entrances by IBM and Google, and musings that the country is primed for Bitcoin.

ghaflaThere’s also buzz around the popular entertainment news site, Ghafla, which is counting more than 1.2 million monthly uniques four years since it launched, according to founder Sam Majani. These metrics make Ghafla the country’s most popular entertainment news site, and Majani says he’s making 13 times what he spends on operations for a profit of over 90 percent.

His secret?

Majani told me he tries to take the best practices from U.S. media companies figuring out their business models. He relies on sponsored content and daily deals and runs a shop that is “very, very lean,” he says. Ghafla’s expenses are low, less than $15,000 per year. Majani says it costs $225 per month for rent and Internet bills combined. He saves some money by sharing a dedicated web server with an uncle, and pays his five employees a few hundred dollars a month apiece. (Though this may seem on par with Kenya’s average annual salary of about $1,700 a year, using average salary as a benchmark in a country that’s home to many of the world’s poorest people is a problematic measure.)

“Everyone at Ghafla gets paid. It’s just that it’s not a lot,” Majani said in a February interview. “On the bright side, I’m positive we’ll be able to pay reasonable salaries by the end of this year.”

That confidence may stem from the fact that Ghafla is netting some $20,000 a month, Majani says. The lion’s share of revenue — about 60 percent — comes from banner-ad deals with major sponsors like the French telecom company Orange and the national utility Kenya Power. Around 20 or 25 percent of revenue comes from sponsored content, especially event posts. About 10 percent comes from running ads on social media, Facebook and Twitter, where his pages have combined followings of nearly 150,000. The rest comes from a “Daily Deals” partnership with a ticket-selling company, which Majani expects will expand.

Ghafla isn’t going to be winning investigative journalim awards any time soon; its bread and butter is entertainment coverage and celebrity gossip, but the site also features event listings, some news, and crowd-sourced lyrics — a hold-over from the site’s origins.

“I got kicked out of college and I was chilling in my room, listening to some song by an artist called Bamboo,” said Majani of why he launched Ghafla in the first place. “Went to Google to look for Bamboo’s lyrics, but only got results for forests.”

In the beginning, the idea was to have celebrity contributors annotate crowd-sourced lyrics, similar to the RapGenius model (the two launched at about the same time in 2009). After a year of slow but consistent growth, traffic was topping out. So he expanded into entertainment news. That proved to be a big hit, and after two years of growing the site and investing about $20,000 of his own money, he had caught the attention of local investors.

Majani got a cash infusion from 88mph, a Google-sponsored venture capital fund in Nairobi, allowing him to expand. That seems to have paid off now, as acquisition offers to the tune of half a million dollars have come in. That’s a lot of money in Kenya, but a lowball deal in Majani’s eyes. In a recent blog post, Majani wrote that Ghafla is now getting 9.5 million pageviews per month.

Diving into sponsored content seemed like a logical step for the growing organization once Majani realized that events listings were generating a lot of revenue for local clubs but club owners weren’t paying anything for the free promotion. So Majani did a test, giving some down-and-out clubs a chance to pay for a sponsored event listing — the idea was to see whether club owners noticed an uptick in attendance after sponsored posts advertised their establishments.

“They experienced full houses after promoting,” Majani told me. “You can’t ignore sponsored stories,” he says.

In the beginning, Majani felt it was okay to blur the lines between sponsored posts and editorial stories to a degree that would make some news organizations uncomfortable. (For instance, this is a paid post, which isn’t particularly clear.) “With online media companies in Africa, you have to compromise,” he told me in May. “That means writing favorable things about entities you may not even be aware of, and sometimes stepping out of our topical focus.” His staff also wrote sponsored posts published on other blogs and news sites.

By August, he said he had changed his mind. He looked into how sites like Business Insider — one of his favorites — and BuzzFeed label their advertising. He decided to follow a similar format, but uses the term “featured” rather than “sponsored” to flag advertising for what it is. (Sponsored posts have a distinct home on the Ghafla homepage — they’re in the blue box on the bottom right.)

Majani’s next big challenge is mobile advertising, especially given Kenya’s high mobile adoption rate and huge stake in the global mobile-money system.

But the mobile advertising business has not blossomed as quickly as Kenya’s M-Pesa mobile banking system, Majani says. Google AdSense for mobile is not yet available in Kenya. Many Kenyans use cheap feature phones, so advertising options are limited by lower-tech devices. Culturally, users are still adapting to the new products and services that smartphones bring.

All this leaves Majani with some imperfect solutions for mobile revenue, even as his mobile traffic numbers soar. At the beginning of the year, he received 20 to 30 percent of his traffic via mobile. As with many news sites, that number is approaching 50 percent now.

Effective mobile advertising in Kenya, he says, will have to work across platforms or media. For example, a recent presidential candidate created an ad that provided users with a dial-in number. When called, users could hear a recording of an ad for the candidate, with options for what to hear. Other advertising solutions integrate with SMS. Future ads might send users location-based text messages.

Finally, Majani is experimenting with some slightly more investigative journalism. “By my calculations, investigative journalism will be a loss making venture, but it’s huge in terms of brand building,” Majani said.

POSTED     Nov. 18, 2013, 10 a.m.
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